Mon | Jul 16, 2018

Margaritaville Caribbean says delisting will cut costs

Published:Wednesday | June 7, 2017 | 12:00 AMAvia Collinder
Ian Dear, Group CEO of Margaritaville Caribbean Limited.

Margaritaville Caribbean Limited (MCL) will delist its preference shares from the Jamaica Stock Exchange (JSE) by early next week.

Its subsidiary restaurant company, Margaritaville Turks Limited, will continue to trade on the US dollar market of the Kingston exchange.

On Friday, June 2, the company advised the market that it would delist the 60.8 million preference shares listed on the JSE within 10 days of the notice. However, the shares will remain in issue. MCL plans to issue certificates to the holders of the stock.

"There will be cost savings to the group by delisting," Margaritaville Caribbean Chairman & CEO Ian Dear told Gleaner Business.

In April 2014, MCL listed its prefs by way of introduction on the JSE Main Market, and Margaritaville Turks listed its ordinary shares on the US dollar market.

The value of the preference stock is unchanged at its $5.48 listing price for the three years that it has been on the market.

"The original purpose of listing the preference shares was to encourage trading, but since listing, no shares actually traded. What became apparent was that the original holders of the preference shares were happy with the investment and therefore had no reason to trade on the stock exchange. Every single original holder of the preference shares is still in place," said Dear.

"Therefore, we found that there was no real advantage in this case of being on the stock exchange, especially with no common stock being listed with no trading actually taking place," he said.


Top ten holders


The top ten holders of the MCL9 preference stock are GraceKennedy Pension Scheme Limited with 32.9 per cent; ATL Group Pension Fund Trustee Nominees with 24.7 per cent; JSD Trustee Services Limited Sigma with 16.2 per cent; NCB Insurance Company Limited with 21.7 per cent shared in six different accounts; and Maurice Clarke with 3.2 per cent.

Margaritaville Caribbean is the parent company for a number of subsidiaries that own and operate attractions, restaurants, bars, nightclubs and retail outlets throughout the Caribbean.

The company currently operates nine Jimmy Buffett Margaritaville locations across four Caribbean countries, the most recent of which was established in St Thomas, US Virgin Islands in August 2015 under partnership created with Wyndham Vacation Ownership, said to be the largest timeshare operator in the world.

The St Thomas property operates under the flagship of Margaritaville Vacation Club, a concept which Dear says the company will grow as a part of its portfolio.

Since 2011, the company has added international food and beverage franchises such as Quiznos Subs, American Dairy Queen (DQ Grill and Chill), Auntie Anne's Pretzels, Cinnabon, Moe's Southwest Grill, Wendy's, Domino's Pizza and Nathan's Famous Hotdogs.

At year end June 2016, MCL experienced growth of 4.7 per cent overall with revenue of US$34.7 million. EBITDA for the fiscal year was $3.6 million, up from $3.5 million in 2015.

For the nine months ended February 2017, with operations somewhat affected by a downward drift in cruise-related sales amid rough seas in the Northern Caribbean but otherwise boosted by the opening of the new location in St Thomas, group sales fell by more than half-million dollars, but net profit grew sevenfold from US$160,000 to US$1.15 million.